Understanding and managing risks properly has become a key challenge and source of success for corporations and banks, but also government organizations. The challenge is not confined to understanding the underlying risks and tools to deal with them, but overcoming organizational hurdles and conflicting incentives within the organization. Incomplete risk analysis and distorted incentives of decision makers in the implementation process can have devastating and long lasting effects for corporations and society.
The specialization takes a holistic – applied – perspective, drawing general lessons from real cases and providing students with the tools necessary to asses and implement risk management strategies that create value and are sustainable. Topics include, but are not limited to
- Australia’s vaccination strategy and the COVID vaccine procurement strategy of the European Union: what went wrong and lessons for corporate risk management.
- Identifying organizational challenges of risk management: when conflicting objectives compromise risk management.
- Bringing management on board and designing a coherent risk management strategy: getting the commitment and data that is essential for effective risk management.
- Monte Carlo simulation: a simple and flexible tool to model risk.
- Understanding the challenges of chaotic systems and endogenous risk.
- Floods and climate risk: challenges for corporations, financial stability, and insurance.
- The financial crisis of 2008-2009: key lessons for risk management.
- CAT bonds and securitization.
Risk management is often an entry position into the world of corporations and government institutions. Yet, risk management, good or bad, has a profound and lasting impact on the success of these entities. After completion of the course, students will
- understand strategies and tools to transform the concepts of risk management into real outcomes and decisions,
- be alert to the dangers of deeply rooted misconceptions about handling future events and the danger of falling into the trap of the “perceived obvious” (“Hausverstand”),
- understand that the cornerstone of a successful risk management strategy is a clear framework of risk policy and be able to rely on examples to form such policies,
- have tools to get the support and involvement of senior management – and succeed as an entry level employee in medium and large enterprises and public institutions.
This is an applied course. Real word problems are complex and the “solution” in many cases not just right or wrong. Instead, the solution involves a comprehensive analysis and identification of key problems. After a careful analysis of the specific case and problems at hand, students have to develop a coherent line of reasoning. Students have to be willing to actively participate in their groups, be interested in tackling challenging questions, and be comfortable with a learning approach that does not involve “solving a set of exercises to prepare for the exam.”
The course builds on real cases, using topics covered in the press, academic literature, Harvard Business School Case Studies. Students form groups in which they discuss the cases and exercise, but each individual of the group has to be prepared to present the insights of their group in class.
In Course I, students learn to use Monte Carlo Simulation, applying the software Oracle Crystal Ball. Based on the lecturer’s experience of using Monte Carlo Simulations as a risk manager, students receive a hands on experience to model risk and develop a risk management strategies based on real decision problems.
Active class participation is important and individual students might be asked to lead a discussion or otherwise participate in the discussion.